Taiwanese carrier says results were “significantly impacted” by fuel prices and that it is “cautiously conservative” on its outlook for 2019.
Yang Ming Marine Transport Corporation said it had a net loss of $218.5 million in 2018, with operating results significantly impacted by higher fuel prices.
The Taiwanese container carrier said its revenue last year was $4.7 billion, an 8.2 percent increase over 2017, when it totaled $4.35 billion.
Volumes were up 11 percent in 2018 to 5,232,000 TEUs. But the higher volumes were not able to offset higher fuel costs. It said global bunker fuel prices were 31 percent higher than in 2018.
“Based on market data collected by Alphaliner showing weak demand growth at 4.8 percent and an excess supply growth at 5.7 percent in 2018, freight rates struggled to rise to levels that could set off against the higher bunker costs,” Yang Ming said.
“Moving into 2019, unsettling geopolitical risk factors, including the ongoing U.S.-China trade war and Brexit, continue to impact bunker fuel prices and conditions in global trade,” it said.
Yang Ming also said the International Maritime Organization (IMO) 2020 low-sulfur regulations, which are scheduled for implementation on Jan. 1, 2020, “will inevitably increase operating costs, as global carriers decide between installing scrubbers on vessels or using more costly low-sulfur fuel in order to be in compliance.”
However, Yang Ming said there is some indication that the supply-demand balance in the container shipping industry may improve.
“Based on the latest forecast from Alphaliner, the supply growth rate in 2019 is projected at 3.1 percent, while the demand rate will grow at around 3.6 percent. Therefore, the trend in global shipping is moving towards a more balanced level of supply and demand. Driven by the IMO 2020 low-sulphur regulations, the world’s fleet may also see a greater number of older, inefficient vessels scrapped in the near term, which would add complexity and challenges to the shipping market,” Yang Ming said.
“In light of the uncertainties surrounding global trade and the pressure on bunker prices, Yang Ming remains cautiously conservative on its outlook for 2019.”